If you’re part of the Millennial generation—born between the early 1980s and the early 2000s—planning for retirement may not be near the top of your list of priorities. But for several reasons, it probably should be.
Millennials face a number of financial challenges that differ from their parents’ generation. And if you’re an LGBTQ Millennial, you are likely to encounter additional obstacles.
For instance, if something happened to you or your partner, would the survivor be able to go on financially? In this situation, unless you have your home and other assets properly titled, there’s a chance that “blood relatives” could be first in line to inherit them.
In the past, most workers could count on defined-benefit pension plans from their employers. These plans paid out a set amount of income every month, and employers were responsible for ensuring that the money flowed to retired workers. But this isn’t so today. Most companies, both large and small, have done away with defined-benefit pension plans. They have been replaced by the 401(k), which leaves the success of the investments—and the future retirement-income stream—solely up to the participant.
Moreover, given the rise in entrepreneurship in the Millennial generation, it could be that you’ve started your own business or work as a freelancer in the “gig” economy, and you have no retirement plan in place at all.
Today’s younger generation is also saddled with student-loan debt that averages around$37,000. Because of this, many young professionals are starting out in the red. Without a good strategy in place, it can take years or even decades to pay off student-loan debt and get back to square one.
Another big difference between Millennials and past generations is the possibility of “living too long.” Although that might sound strange, people are living much longer now than they did in the past, so it is imperative that your money last as long as you do. Otherwise, you run the risk of depleting your savings.
In addition, if you and your partner have tied the knot, there are various tax and financial strategies that you could take advantage of now—strategies that you will be thankful for in the future.
Given that same-sex couples can legally marry in all 50 U.S. states, it is now possible for LGBTQ spouses to plan ahead together, versus planning as two “single” individuals.
Programs like Social Security’s spousal and survivor benefits can oftentimes be worked into your overall financial plan. If you don’t know which of these benefits you are eligible for, you could be leaving money on the table.
It is also estimated that the Millennial generation stands to inherit a record amount of wealth. According to U.S. News, more than 75 million Millennials could take over an estimated $30 trillion in wealth from their Baby Boomer parents. This is further reinforced by AARP statistics showing that people who are over age 50 today hold roughly 80 percent of the household wealth in America.
Even though this would appear to be good news—at least from a financial standpoint—the reality is that if you don’t have the right plan in place, you could end up handing over a sizeable chunk of your inheritance to Uncle Sam.
When it comes to planning for your financial future, it is never too early to get started. Even if you don’t feel like you have a lot to contribute to a savings or investment plan at this moment, just knowing where the gaps lie can be an excellent start.
Your choice of a financial advisor will have a lot to do with the success of your overall plan, so it is imperative to work with a professional who is well-versed in the financial needs of your generation, and who is up-to-date on legislation and potential challenges—particularly those affecting the LGBTQ community.
This article appears in the October 2018 edition of OutSmart magazine.